Dairy prices buoyed by stockpile bid

International dairy buyers concerned about a New Zealand production downturn have buoyed global dairy prices, as they seek to stockpile product.

Fonterra's fortnightly global dairy auction, held overnight on Tuesday, rose 5.9% across all products, while the crucial whole-milk powder trade was up 7.6% at $US3226 ($NZ4414) a tonne.

ASB rural economist Nathan Penny said the recent stall in New Zealand dairy production had supported the lift in auction prices, which reaffirmed ASB's ''optimistic'' 2017-18 milk price forecast of $6.50 per kilogram of milk solids.

Fonterra's forecast for the season sits at $6.40 at present and Synlait's at $6.50.

However, Mr Penny cautioned that given the recent rain which swept across much of the country, the auction price strength would prove temporary. He predicted production would improve later in the dairy season.